Is it possible to win an unfair and deceptive marketing case filed by the Federal Trade Commission? In a word: Yes. Case in point: FTC v. DirecTV.
Let’s take a look.
FTC Deceptive Marketing Case: FTC v. DirecTV
Claimant: The Federal Trade Commission (FTC)
Defendant: DirecTV (broadcast satellite provider)
Charges: The FTC accused DirecTV of using unscrupulous promotional tactics. Primarily, the agency questioned the satellite company’s “introductory offer” and alleged that it misled consumers. Specifically, the commission didn’t think DirecTV clearly disclosed — via print, banner, TV and website promotions — that:
- Initial pricing was limited to the first 12 months of 24-month subscriptions;
- Subscribers were bound to a 24-month commitment;
- Early termination fees applied if subscribers cancelled early; and
- Premium channels were only free for three months.
Damage Request: The FTC wanted DirecTV to fork over $3.95 billion — with a “B” — for its alleged marketing and advertising sins.
Ruling: The court found that most of DirecTV’s ads were fine and met marketing compliance standards; however, some of the website allegations will continue to be examined.
The FTC Didn’t Fare Well In An Unfair and Deceptive Marketing Case. Why?
In FTC v. DirecTV, the commission failed to satisfy certain evidentiary tests.
- Even though the FTC submitted 40,000 pieces of evidence to back up its claims, the court ruled that it failed to demonstrate that the campaign’s “net impression” was deceptive.
- The FTC relied on an eye-tracking study to support its claim that DirecTV’s disclosures didn’t meet the “clear and conspicuous” standard. However, the court felt the research didn’t account for “consumer sentiment, persuasion, or understanding” and was therefore unconvincing.
- At the trial, an FTC expert asserted that call center data revealed a pattern of customer confusion and brand obfuscation, but the court remained unconvinced by the analysis.
- Interestingly, the FTC also entered some DirecTV internal documents into evidence, which, presumably, they hoped would show the company’s intentional attempts at customer manipulation. Instead, the judge felt the documents only proved DirecTV’s desire to improve customer interactions, but did not violate the FTC Act.
The FTC DID win on a couple of Points. And Every Business Should Take 20 Seconds To Know Which.
The Federal Trade Commission didn’t completely whiff. The judge did OK some of the charges relating to DirecTV’s website. Ultimately, the trial will continue and examine various disclosures that the FTC says violate promotional compliance standards — especially since some of the key agreement terms were disclosed exclusively via links.
Connect With An FTC Defense Lawyer
Is the FTC pointing its unfair and deceptive marketing finger at you? If so, we’re here to support you. Our FTC defense team has helped countless clients with various marketing-related legal matters.
We also offer compliance audits to avoid FTC investigations. We’ll look at your business plan and promotional materials, and then provide guidance to ensure you’re operating on the compliant side of the law — both at home and internationally.
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